Starbuck
01-05-2010, 08:16 AM
Ever wondered how an airline claiming to be europes lowest fare carrier can make such profits? Well, its not just down to the ripoff baggage charges and other fees, or even the exploitation and victimisation of its low paid workers.
No, the real source of Ryanairs profitability is taxpayer subsidies.
MASSSIVE taxpayer subsidies, extorted through local authority run airports throughout europe. The total value in subsidies is now revealed to be 660M euro. Twice the annual profit last year - they'd have made huge losses if not for taxpayer support.
Remember the outcry over subsidies Aer Lingus received - in three years out of its 60 year history? Where is the outcry over Ryanairs ANNUAL subsidies from taxpayers, which in one year are multiples of what Aer Lingus received over its lifetime (and all paid back in taxes and dividends to Government).
The subsidies that keep Ryanair profits airborne
GERRY BYRNE
The Irish Times - Saturday, May 1, 2010 (http://www.irishtimes.com/newspaper/weekend/2010/0501/1224269451828.html)
Ryanair receives huge subsidies from European airports – and has won its latest battle to retain them – but the EU continues to investigate the practice
TO THE FURY of Lufthansa, and the delight of Ryanair, the citizens of the north German city of Lübeck last weekend voted almost two to one in favour of continuing taxpayer subsidies to keep their airport (called Hamburg by Ryanair), open for at least another two years. The German airline had exhorted cash-strapped Lübeckians to put creches, classrooms and hospital beds before wealthy Irish carriers. As far as Lufthansa is concerned, the airport is just one of 200 regional EU airfields which Ryanair relies upon to funnel hundreds of millions of what Lufthansa calls “questionable subsidies” direct to its balance sheet.
Lufthansa says that if Ryanair was stripped of free or subsidised airport services in addition to cash, in the form of “marketing support”, it would lose money. “If all the airport subsidies and support paid to Ryanair were taken away, its economic situation would be very different,” says the Thomas Kropp, a spokesman for the German airline.
Not only were some airports providing free staff for Ryanair check-in desks, they also cleaned the planes for nothing. Ryanair aircraft often landed free of charge, and where fees were charged they were offset by the massive “marketing support” demanded by the airline. This marketing money meant that, in return for cash running into many millions, the airports and their regions were promised publicity on Ryanair’s website and in its in-flight magazine.
But, pointed out the cour, a half-decent ad agency would have spent that money far more productively. The auditor concluded that most of the cash went straight into boosting Ryanair’s profits.
In some cases, net subsidies amounted to as much as €32 per passenger carried, as with Rodez, a French airport where Ryanair benefited to the tune of at least €3.2 million between 2004 and 2006 for just three flights per route per week. At Brest, subsidies totalled €23 per passenger. At busier Beauvais (Ryanair’s Paris), the subsidy per passenger between 2001 and 2006 was a more modest €9, but total aid in cash and benefits still amounted to €28.6 million.
Some airports can barely afford these subventions. At Bergerac, the cour found that Ryanair gained €2.3 million worth of subsidy from an airport which itself needed annual local government subsidies of €500,000 to stave off bankruptcy.[How is this legal?]
Subsidies for new routes are perfectly legal – Dublin airport offers them all the time – but according to EU guidelines they should be for a limited period (usually three to five years) and should decline in value year on year. The intention is that they end when a route is starting to become profitable.
The general council of Charentes, which operates Angoulême Airport, in 2008 agreed to pay Ryanair almost €1 million in three annual payments, but as it raised the final €225,000 due for this year it was hit out of the blue by a Ryanair demand for a further €175,000. The alternative to paying up was a Ryanair pull-out. Other European airports have reported similar tactics as Ryanair seeks not just to continue subsidies but to increase them.
At present, airports which refuse to pay up can have their Ryanair services cancelled almost overnight, to be started up again within days at a neighbouring airfield. The company is able to do this because there is no limit to the subsidies a company can claim in any one region, and because there is no obligation to repay subsidies when a service is withdrawn. Critics say this loophole could be plugged by outlawing further subsidies to the same airline within, say, a 50-mile radius.
Efforts to limit subsidy shopping by Ryanair and other low-cost airlines were dealt a blow when, in 2008, Ryanair won an appeal against an EU Commission decision that the generous subsidies it enjoyed at Charleroi (near Brussels) were illegal. The airline insists that this means all its other subsidised services are, by default, also legal, but Commission insiders advise caution. They suggest that the Charleroi decision was thrown out as much for serious procedural errors as for the righteousness of Ryanair’s subsidy demands.
Until the new EU Commission took office this spring, airline competition and state aid issues were largely handled within the Transport Directorate. Last week a Brussels functionary admitted that, all things being equal, the Transport Commissioner has always tended to arrive at decisions which favoured increased air access to the regions over competition issues.
That attitude is now expected to change dramatically as the European Commissioner for Competition has assumed authority over all competition and state aid complaints, irrespective of sector. Lufthansa insiders say this will mean that the half-dozen or so surviving complaints about Ryanair subsidies, which have languished for years, will now be fast-tracked and decisions handed down in the near future.
In response to questions for this article, Ryanair released the following statement: “As you are undoubtedly aware the European Court of First Instance in December 2008 has already dismissed these claims (and the EU guidelines which were based on the original unlawful Charleroi decision) when it found, in the Charleroi case, that Ryanair’s airport agreements fully complied with EU competition rules and were NOT therefore either state aid or subsidy. The European Commission also confirmed these findings when in January 2010 they dismissed similar claims in the case of Bratislava airport.”
In the meantime, there is alarm in airline circles at the Ryanair proposal to appoint Charlie McCreevy to its board. As a former EU commissioner for the internal market, he has an almost unrivalled understanding of how Europe’s economy functions. He could be in a superb position to suggest strategies to continue its subsidy regime. The Commission is probing the proposed appointment, but so far there is no indication that it will outlaw it.
Low-cost airline?
- €35 million in subsidies were paid to Ryanair by various French airports in 2006.
- Subsidies to Ryanair amounted to €32 per passenger at Rodez Airport, in France, where the airline benefited to the tune of at least €3.2 million between 2004 and 2006 for just three flights per route per week
- At Bergerac, Ryanair gained €2.3 million worth of subsidy from an airport which itself needed annual local government subsidies of €500,000 to stave off bankruptcy
The above article has been abbreviated - read the full piece on the link provided to the Irish Times website.
Finally, one has to wonder at how way micko has gotten away with this for decades. All the while bleating about unfair taxes and high airport charges! Contrast the kid glove treatment he receives from the media and the regulator with how Quinn has been attacked. *************Removed to Dev and Ed Thread.
This article is a massive departure for the Irish Media - perhaps the appointment of Charlie to the board at such a critical juncture for them has finally woken up the hacks. Charlie was a bridge too far?
No, the real source of Ryanairs profitability is taxpayer subsidies.
MASSSIVE taxpayer subsidies, extorted through local authority run airports throughout europe. The total value in subsidies is now revealed to be 660M euro. Twice the annual profit last year - they'd have made huge losses if not for taxpayer support.
Remember the outcry over subsidies Aer Lingus received - in three years out of its 60 year history? Where is the outcry over Ryanairs ANNUAL subsidies from taxpayers, which in one year are multiples of what Aer Lingus received over its lifetime (and all paid back in taxes and dividends to Government).
The subsidies that keep Ryanair profits airborne
GERRY BYRNE
The Irish Times - Saturday, May 1, 2010 (http://www.irishtimes.com/newspaper/weekend/2010/0501/1224269451828.html)
Ryanair receives huge subsidies from European airports – and has won its latest battle to retain them – but the EU continues to investigate the practice
TO THE FURY of Lufthansa, and the delight of Ryanair, the citizens of the north German city of Lübeck last weekend voted almost two to one in favour of continuing taxpayer subsidies to keep their airport (called Hamburg by Ryanair), open for at least another two years. The German airline had exhorted cash-strapped Lübeckians to put creches, classrooms and hospital beds before wealthy Irish carriers. As far as Lufthansa is concerned, the airport is just one of 200 regional EU airfields which Ryanair relies upon to funnel hundreds of millions of what Lufthansa calls “questionable subsidies” direct to its balance sheet.
Lufthansa says that if Ryanair was stripped of free or subsidised airport services in addition to cash, in the form of “marketing support”, it would lose money. “If all the airport subsidies and support paid to Ryanair were taken away, its economic situation would be very different,” says the Thomas Kropp, a spokesman for the German airline.
Not only were some airports providing free staff for Ryanair check-in desks, they also cleaned the planes for nothing. Ryanair aircraft often landed free of charge, and where fees were charged they were offset by the massive “marketing support” demanded by the airline. This marketing money meant that, in return for cash running into many millions, the airports and their regions were promised publicity on Ryanair’s website and in its in-flight magazine.
But, pointed out the cour, a half-decent ad agency would have spent that money far more productively. The auditor concluded that most of the cash went straight into boosting Ryanair’s profits.
In some cases, net subsidies amounted to as much as €32 per passenger carried, as with Rodez, a French airport where Ryanair benefited to the tune of at least €3.2 million between 2004 and 2006 for just three flights per route per week. At Brest, subsidies totalled €23 per passenger. At busier Beauvais (Ryanair’s Paris), the subsidy per passenger between 2001 and 2006 was a more modest €9, but total aid in cash and benefits still amounted to €28.6 million.
Some airports can barely afford these subventions. At Bergerac, the cour found that Ryanair gained €2.3 million worth of subsidy from an airport which itself needed annual local government subsidies of €500,000 to stave off bankruptcy.[How is this legal?]
Subsidies for new routes are perfectly legal – Dublin airport offers them all the time – but according to EU guidelines they should be for a limited period (usually three to five years) and should decline in value year on year. The intention is that they end when a route is starting to become profitable.
The general council of Charentes, which operates Angoulême Airport, in 2008 agreed to pay Ryanair almost €1 million in three annual payments, but as it raised the final €225,000 due for this year it was hit out of the blue by a Ryanair demand for a further €175,000. The alternative to paying up was a Ryanair pull-out. Other European airports have reported similar tactics as Ryanair seeks not just to continue subsidies but to increase them.
At present, airports which refuse to pay up can have their Ryanair services cancelled almost overnight, to be started up again within days at a neighbouring airfield. The company is able to do this because there is no limit to the subsidies a company can claim in any one region, and because there is no obligation to repay subsidies when a service is withdrawn. Critics say this loophole could be plugged by outlawing further subsidies to the same airline within, say, a 50-mile radius.
Efforts to limit subsidy shopping by Ryanair and other low-cost airlines were dealt a blow when, in 2008, Ryanair won an appeal against an EU Commission decision that the generous subsidies it enjoyed at Charleroi (near Brussels) were illegal. The airline insists that this means all its other subsidised services are, by default, also legal, but Commission insiders advise caution. They suggest that the Charleroi decision was thrown out as much for serious procedural errors as for the righteousness of Ryanair’s subsidy demands.
Until the new EU Commission took office this spring, airline competition and state aid issues were largely handled within the Transport Directorate. Last week a Brussels functionary admitted that, all things being equal, the Transport Commissioner has always tended to arrive at decisions which favoured increased air access to the regions over competition issues.
That attitude is now expected to change dramatically as the European Commissioner for Competition has assumed authority over all competition and state aid complaints, irrespective of sector. Lufthansa insiders say this will mean that the half-dozen or so surviving complaints about Ryanair subsidies, which have languished for years, will now be fast-tracked and decisions handed down in the near future.
In response to questions for this article, Ryanair released the following statement: “As you are undoubtedly aware the European Court of First Instance in December 2008 has already dismissed these claims (and the EU guidelines which were based on the original unlawful Charleroi decision) when it found, in the Charleroi case, that Ryanair’s airport agreements fully complied with EU competition rules and were NOT therefore either state aid or subsidy. The European Commission also confirmed these findings when in January 2010 they dismissed similar claims in the case of Bratislava airport.”
In the meantime, there is alarm in airline circles at the Ryanair proposal to appoint Charlie McCreevy to its board. As a former EU commissioner for the internal market, he has an almost unrivalled understanding of how Europe’s economy functions. He could be in a superb position to suggest strategies to continue its subsidy regime. The Commission is probing the proposed appointment, but so far there is no indication that it will outlaw it.
Low-cost airline?
- €35 million in subsidies were paid to Ryanair by various French airports in 2006.
- Subsidies to Ryanair amounted to €32 per passenger at Rodez Airport, in France, where the airline benefited to the tune of at least €3.2 million between 2004 and 2006 for just three flights per route per week
- At Bergerac, Ryanair gained €2.3 million worth of subsidy from an airport which itself needed annual local government subsidies of €500,000 to stave off bankruptcy
The above article has been abbreviated - read the full piece on the link provided to the Irish Times website.
Finally, one has to wonder at how way micko has gotten away with this for decades. All the while bleating about unfair taxes and high airport charges! Contrast the kid glove treatment he receives from the media and the regulator with how Quinn has been attacked. *************Removed to Dev and Ed Thread.
This article is a massive departure for the Irish Media - perhaps the appointment of Charlie to the board at such a critical juncture for them has finally woken up the hacks. Charlie was a bridge too far?